The singer has been locked in a legal battle with Jennifer O'Neill since 2011, when she filed suit claiming she is owed $380,000 for carrying out 7,168 hours of extra work during the 2010 Monster Ball trek.

The case was scheduled to head for trial next month, when a jury would be primed to decide whether the singer's 24/7 demands left O'Neill with little free time, as she alleged in her legal documents.

However, lawyers for the two parties have worked out a negotiation in an effort to bring the lengthy dispute to an end, the New York Post reports.

A letter sent by O'Neill's attorney to Manhattan Federal Judge Paul Gardephe on Wednesday reads: "(Both sides) have been engaged in significant settlement negotiations over the past two weeks. We have utilized the services of an independent mediator... who brought us to a place where we are in agreement on the most major terms related to a settlement. I am hopeful that the parties can reach a mutual agreement, thus obviating the need for a trial."

Relations between Gaga and her ex-employee turned nasty during the court battle. In a deposition for the case, the star branded O'Neill a "[expletive] hood rat" and accused her of failing in her duties by making her carry her own luggage and unpack her own bags, which was "very stressful" for the singer.